The NAO report found that ministers had failed to comply with proper procurement processes. It also criticised the government for its temporary decision to exclude athletics from the stadium.
The report’s prime concern over procurement was that client Wembley National Stadium Limited had given contractor Multiplex a potential competitive advantage over other bidders by meeting Multiplex prior to the formal procurement process.
The NAO said there had been “a failure of expected standards of governance which should have covered controls to resolve any potential conflict of interest.”
The decision to drop the athletics track was taken by Chris Smith the former culture and sport secretary. The NAO said that the decision to take out the track in exchange for the Football Association paying back £20m of lottery money “was not handled well” and that the payment did not “comply with the proper processes in place for handling lottery money.”
The athletics track has since been reinstated by Chris Smith’s replacement Tessa Jowell, who abandoned Smith’s plan for a separate track at Pickett’s Lock.
The spending watchdog has also warned that £161m of public money could be lost if the project runs into difficulties. German bank Westdeutsche Landesbank is providing 56% - £425 m – of the £757m finance. Even if the FA wanted to rescue the scheme it would be up to the bank “whether to accept the plan or to take control of the project itself to maximise its chances of recovering its investment.”
Despite the criticisms the Audit Office acknowledges that the government took the right decision in providing more money for the scheme when WSNL asked for more money in 2001.
The government provided extra funding - £20m from the Department for Culture, Media and Sport and £21m from the London Development Agency – after coming to the conclusion that the project was worthy of further support.
The head of the National Audit Office Sir John Bourn praised the department’s assessment of the risks and said that he welcomed “the action taken that has been taken to review the project and protect the public interest.”
At the moment the construction of Wembley is going to plan and it is scheduled to meet the 2006 deadline for completion. The government is also partly protected from any further public subsidy by the terms of the contract with Multiplex.
The cost of any overruns will have to be borne by Multiplex, unless there is a change in the design. And if the stadium is handed over late Multiplex will also be liable. With these provisions the government should be able to avoid more handouts and hopefully avoid being red-carded by the National Audit Office in three years’ time.